10 tips for first-time homebuyers

Keep realistic expectations when searching for your first home. (Courtesy of Dreamstime)

If all goes well, and so far it hasn't, congratulations may soon be in order. I'm about to be a house grandma. My daughter Paige, 25, and her long-term boyfriend, John, also 25 and a family fixture we have known since they rode the school bus together in ninth grade, are looking for their first house in College Station, Texas.

Paige is about to start vet school, while John gets his PhD in engineering. They are trying to buy a house with money they've saved, and a loan they have qualified for.

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What the heck? My daughter qualified for a loan without me?

To date, they've submitted two offers, and lost out on both. Oh, real estate can be so cruel. They're working with a seasoned Realtor who is teaching them the ropes.

Meanwhile, I am on diaper pins and knitting needles, wringing my hands, pacing, waiting to find out which house I will be able to get my hands on and mold into my…, err, I mean, Paige's, dream house. Historically, when helping my kids with their living spaces, restraint has not been my forte. I'm working on this.

The first house they went for, a vintage home circa 1940 that I could not wait to get to work on, drew multiple offers. Paige and John offered $5,000 over the asking price and 20 percent down. They wrote the seller a letter that would have warmed the heart of a black mamba. The lending officer called the seller's agent to extol the couple's excellent qualifications. They lost out to an all-cash buyer.

A week later they put a bid on a slightly dilapidated ranch house with good fix-up potential in a good neighborhood. The house had languished on the market for over 90 days. So they offered $10,000 under asking price, leaving room to negotiate. Darn if that same night another buyer didn't swoop in with a better offer, which the sellers accepted.

"What? How?" I asked, when Paige shared the bad news.

"I thought we had it," she said.

"I'd already drawn up a furniture plan and chosen paint colors," I said.

Now, I'm completely consumed. Every day she sends me links to properties they're considering and asks my opinion. She calls six times a day, sometimes just to panic. (Where did she get that?) Though I'm states away, I try to help her divine the line between good potential and money pit.

I put on a brave face to Paige, but to calm my own expectant nerves, I ask Suzanne McMillan, a Nashville-based real estate agent who works with a lot of first-time buyers, what advice she'd give this young couple. She offered these 10 tips:

Be realistic: You don’t come out of college and buy your dream home. That takes time. Look for houses that aren’t perfect but that have potential. Try to see past the mess to what could be, but don’t get in over your head, she said.

Remember, this isn’t HGTV. For all the good home improvement shows have done, they have also done a disservice making renovations look too easy. “Many millennials think they can do anything because Chip and Joanna Gaines can. As a result, they are overconfident, and that can backfire,” said McMillan.

Don’t buy too high. Aim for a house that’s a little less than you can afford so you have some cushion. “New homebuyers often underestimate the cost of home ownership,” she said. You need reserves to deal with the landscape, the broken water heater, and the squirrels in the attic.

Know what you’re up against. Sellers like first-time buyers because they come in without contingencies – like another house to sell. However, they can prefer more established buyers who have owned real estate, have more credit, and can put more cash down. A good Realtor can help sell strengths and soften shortcomings.

Don’t be seduced by fancy finishes. Yes, the hardwood floors, the granite counters, the stainless-steel appliances and the farmhouse sink are fabulous, said McMillan, but you can add those later. Instead value the unseen like a new roof, new HVAC system, new insulation, and new water heater.

Know what can give and what can’t. If the house is on tricky slope, or near a sink hole, or backs up to a junkyard or a prison, or has terrible schools, move on. Better to get a subpar house on a nice lot in a nice area than a fixed-up one in a bad spot.

Don’t buy perfect. Sure, the house might be turnkey, but you have no room to improve. If you buy a house that needs a little TLC, you can treat it like an investment.

Play in your league. If you’re constantly getting beat out in your price range by higher offers or all-cash buyers, try looking in a lower price range where you have more leverage.

Write a letter. Sellers want to be good stewards of their homes and neighborhoods. Many want to know their house is going to someone who will love it and live in it, and not to an investor who just wants to fix it up and rent it out. Show them you will love it like they do.

Be patient. If you lose out on the house you want, don’t lose hope. Every day is a new market.